The yen has rallied on broad risk-off positioning as stock and commodity markets tumbled and top grade sovereign bonds rose. As for other currencies, the dollar bloc and other commodity currencies have underperformed, along with BRIC and other developing-world currencies. The dollar traded firmer against these underperformers, but lost ground to most of the other major currencies, such as the euro and pound. The Fed cut rates by a massive 100 bp in an emergency move announced on Sunday, which brings zero interest rates to the U.S. This was accompanied by the Fed, BoJ, ECB, BoE and SNB announcing measures to boost global dollar liquidity. The BoJ also eased monetary policy and pledged to ramp up exchange-traded funds and other risky assets, while the RBNZ slashed interest rates in New Zealand by 75 bp, taking the cash rate to 0.25%, and the RBA injected liquidity into Australian money markets. G7 leaders will be holding a teleconference at 14:00 GMT (09:00 ET) to discuss the coronavirus. The extraordinary measures didn't assuage market fears, especially with data out of China showing vertiginous 13.5% y/y and 20.5% y/y plunges in industrial production and retail sales in the January-February period. Asian and European stock markets plunged, and S&P 500 futures hit the 5% limit-down mark. USD-JPY trading has been choppy. The pair dove to a low at 105.75, subsequently bounced to a 107.35 high before slumping back to the lower 106.0s, all the time remaining comfortably above recent trend lows. Sub-100.00 levels look like a real possibility in USD-JPY, assuming, as looks likely, the coronavirus continues wield havoc. AUD-USD, in contrast, posted a fresh 11-year low, at 0.6097. With global efforts to contain and delay the spread of the coronavirus likely to persist and intensify, and investors faced with uncertainty about how long these will stay and how severe the economic consequences will be, markets are likely to remain apt to further risk-averse positioning.

[EUR, USD]EUR-USD rallied over 1% after the Fed slashed interest rates 100 bp in an emergency move announced on Sunday. The Fed's move as backed up by major central banks pledging to sustain global dollar liquidity. EUR-USD has hit a high of 1.1237 before capping out. The Fed's action drove the 10-year T-note over Bund yield spread down sharply, from levels above 150 bp to a low at 118.3 bp. We view EUR-USD as a rotational shift higher in the face of the dollar's sharply smaller yield advantage, and don't view this as the start of a bullish trend. The Eurozone is facing serious issues with both Italy and Spain amid nationwide lockdowns in the face of sharp rises in coronavirus cases. Some Italian banks at risk of failing, which threatens to hit the Eurozone financial system hard.

[USD, JPY]The yen has rallied amid the force of risk-off positioning, as stock and commodity markets tumbled and top grade sovereign bonds rose. As for other currencies, the dollar bloc and other commodity currencies have underperformed, along with BRIC and other developing-world currencies. The Fed cut rates by a massive 100 bp in an emergency move announced on Sunday, which brings zero interest rates to the U.S. This was accompanied by the Fed, BoJ, ECB, BoE and SNB announcing measures to boost global dollar liquidity. The BoJ also eased monetary policy and pledged to ramp up exchange-traded funds and other risky assets, while the RBNZ slashed interest rates in New Zealand by 75 bp, taking the cash rate to 0.25%, and the RBA injected liquidity into Australian money markets. G7 leaders will be holding a teleconference at 14:00 GMT (09:00 ET) to discuss the coronavirus. The extraordinary measures didn't assuage market fears, especially with data out of China showing vertiginous 13.5% y/y and 20.5% y/y plunges in industrial production and retail sales in the January-February period. Asian and European stock markets plunged, and S&P 500 futures hit the 5% limit-down mark. USD-JPY trading has been choppy. The pair dove to a low at 105.75, subsequently bounced to a 107.35 high before slumping back to the lower 106.0s, all the time remaining comfortably above recent trend lows. Sub-100.00 levels look like a real possibility in USD-JPY, assuming, as looks likely, the coronavirus continues wield havoc.

[GBP, USD]The pound underperformed the dollar, euro and yen over the last week, though the UK currency still gained ground versus the dollar bloc and other currencies with high-beta characteristics. The BoE's 50 bp rat cut last Wednesday, an unexpected intra-meeting emergency move, was a factor, while the government's announcing of a massive GBP 30 bln fiscal spending plan, detailed during its 2020-21 budget presentation before parliament on Wednesday, didn't have much supportive impact on the pound, being a currency that tends to find itself on the underperforming list of currencies during protracted periods of risk aversion in global markets (given the UK's dependent on foreign investment to fund its current account deficit). Cable printed a five-month low at 1.2260 on Friday, though has since found a footing, aided by the Fed's 100 bps rate cut. Going forward, we expect the pound to remain prone to underperformance. With the UK and Eurozone heading for a coronavirus induced recession, this is not a good time for trade negotiations between the UK and EU, especially the UK's desire to leave the post-Brexit transition membership of the EU's single market and customs union at the end of the year.

[USD, CHF]EUR-CHF has settled back under 1.0600, but remains above the five-year low that was seen on Monday at 1.0505. Safe haven demand for the Swiss currency has returned amid heightening concerns about the global economic disruptions being caused by efforts to contain the coronavirus. The U.S. in January added Switzerland to its list of currency manipulators. The move seems a bit rich given the franc is a demonstrably chronically-overvalued currency in purchasing parity terms (as illustrated by the Economist's Big Mac index), though the Trump administration argues that Switzerland needs a more expansive fiscal policy.

[USD, CAD]USD-CAD rallied by nearly 1% making a high at 1.3925, which , breaking above Friday's 1.3901 high on route. The four-year high seen last week at 1.3996 looks likely to be tested. The Canadian dollar and other dollar bloc currencies have been underperforming amid a backdrop of rekindled risk-aversion in global markets, which has come despite the Fed's 100 bps emergency rate cut and coordinated actions by global central banks to shore up global liquidity of U.S. dollars. The BoC cut 50 bps to 0.75% on Friday, also in an unscheduled move. The BoC stated that the decision "is a proactive measure taken in light of the negative shocks to Canada’s economy arising from the COVID-19 pandemic and the recent sharp drop in oil prices." Given the Fed's move, another 50 bp cut from the BoC is now highly likely at the bank's April meeting as policymakers look to get ahead of the coronavirus pandemic and the plunge in oil prices. Crude prices have taken a fresh turn lower today, but remain off the lows seen following last week's worst-in-nearly-three-decades 30%-plus crash. Sustained declines in oil prices erode Canada's terms of trade, which is the causation link of the Canadian currency's correlation with crude markets. The Canadian dollar will remain subject to near-term volatility and overall underperformance as long as the coronavirus contagion remains in a state of increasing spread.